Monetary Policy with a touch of Basel

Author/Editor:

Ralph Chami ; Thomas F. Cosimano

Publication Date:

October 1, 2001

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The typical portrait of monetary policy has the banks and the money supply being manipulated through changes in bank reserves. However, with only a small portion of bank deposits now subject to reserve requirements, an alternative explanation of how monetary policy influences banks is needed. Over the last decade, capital requirements have effectively replaced reserve requirements as the main constraint on the behavior of banks. This paper explores the implications of Basel capital requirements for monetary policy. In particular, we identify a "bank balance-sheet channel" of monetary policy, which operates through the impact on the money stock and the economy.

Series:

Working Paper No. 01/151

Subject:

English

Publication Date:

October 1, 2001

ISBN/ISSN:

9781451857030/1018-5941

Stock No:

WPIEA1512001

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

47

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